The Hindu Business Line : Centre plans Rs 40 a quintal bonus on paddy

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Home Page - Agricultural Policy
Agri-Biz & Commodities - Rice
Centre plans Rs 40 a quintal bonus on paddy

‘Move aimed at restoring price parity with wheat’

Harish Damodaran

New Delhi, Oct 1 The Centre plans to pay an incentive bonus of Rs 40 per quintal for the current year’s paddy crop, for which procurement operations have just started. This is over and above the already announced minimum support price (MSP) of Rs 645 per quintal for ‘common’ paddy and Rs 675 per quintal for ‘Grade A’ varieties.

“The proposal, to be taken up by the Union Cabinet in its meeting on Thursday, is for a Rs 40 per quintal bonus. What is finally decided could be even higher,” Krishi Bhawan sources told Business Line.

According to them, there was ‘tremendous pressure’ to announce a substantial bonus on paddy, especially after the Centre’s recent measures to hike the procurement price for wheat. Till 2004-05, the difference between the procurement price of wheat and that for ‘Grade A’ paddy was only Rs 50 per quintal. But for the 2006-07 paddy crop (marketed during October-September), the effective price of Rs 650 (MSP plus bonus) was Rs 200 lower than that for wheat (marketed during April-June 2007).

Now that the Commission for Agricultural Costs and Prices (CACP) has recommended an MSP of Rs 1,000 per quintal for the 2007-08 wheat crop – likely to be implemented – the gap vis-À-vis ‘Grade A’ paddy would widen further to Rs 325 per quintal. “Given the desperate stocks position with regard to wheat and also spiralling international prices, there is an economic compulsion to declare a high enough MSP. But if this also unduly upsets the relative price parity with paddy, it could end up fomenting political unrest,” the sources pointed out.

The Opposition Bharatiya Janata Party has already taken up the issue, with its former President Mr M. Venkaiah Naidu, stating in a letter to the Prime Minister, Dr Manmohan Singh, that “there is a growing feeling that there is discrimination between the paddy growers and wheat farmers”.

This perception of ‘taking the paddy farmer for granted’ has also strengthened with paddy (rice) displacing wheat as the real bulwark of the country’s public distribution system (PDS). Procurement of wheat for the Central pool has fallen from 167.95 lakh tonnes (lt) in the 2004-05 marketing season (April-June) to 147.85 lt in 2005-06, 92.26 lt in 2006-07 and 111.04 lt in 2007-08. As against this, rice procurement has risen from 228.28 lt in 2003-04 (October-September) to 246.85 lt in 2004-05; 276.56 lt in 2005-06; and 250.75 lt in the just ended 2006-07 marketing season.

Also, unlike wheat, rice is procured from more number of States, making it a more pan-Indian crop. The bulk of the 111.04 lt of wheat procured this season was accounted for by just four States: Punjab (67.57 lt), Haryana (33.46 lt), Uttar Pradesh (5.49 lt) and Rajasthan (3.84 lt).

In contrast, the major contributors to the 250.75 lt of rice procured in 2006-07 included Punjab (78.28 lt), Andhra Pradesh (53.27 lt), Chhattisgarh (28.58 lt), Uttar Pradesh (25.49 lt), Orissa (19.93 lt), Haryana (17.73 lt), Tamil Nadu (10.78 lt), West Bengal (6.44 lt) and Bihar (4.76 lt).

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